Innovate Here and Produce Here

PublishedDecember 12, 2013

Time to make it cool again.

When my clients talk to me about innovation, it’s almost always a conversation about products rather than processes. They want to know how to create new ideas that create new products. I often remind them that they should also be talking about new processes. New processes can lead to greater efficiency, reduced costs, and – sometimes – to new products.

When my clients do talk to me about new processes, it’s almost always about customer service and satisfaction. I can’t remember the last time I had an engaging conversation about innovation in manufacturing.

It’s a shame really because we may be entering a new paradigm in manufacturing. New processes and methods may just allow the USA to re-establish itself as a leader in manufacturing. That’s the point made by William Bonvillian in a recent article in Science. I think it’s an important trend that we need to think more about – so I’d like to summarize Bonvillian’s article here.

Bonvillian identifies the differences between front-end and back-end innovation. Front-end innovation is mainly about R&D and new products. Back-end innovation focuses on manufacturing; what’s the best way to produce those products? Bonvillian argues that our national innovation investment used to be fairly balanced between the two. Today, with the possible exception of the defense industry, we focus most of our innovation investment on the front-end.

The background to this shift is a change in the way we see manufacturing – a change in the paradigm. The original paradigm was innovate-here-and-produce-here. The current paradigm is innovate-here-and-produce-there. This has largely been driven by offshore manufacturing. Bonvillian argues, however, that the current paradigm is not just driven by low wages. Offshore centers like China have also invested heavily in back-end innovation.

The next paradigm could be innovate-there-and-produce-there, which would leave the USA essentially as a services economy. Bonvillian argues, however, that we could reverse this trend and return to the original paradigm – innovate-here-and-produce-here – through initiatives in Advanced Manufacturing or AM. He points out that Germany, like the USA, has a high-cost manufacturing infrastructure yet runs “…major trade surpluses in manufactured goods, whereas the United States has run large deficits”.

So, what does Advanced Manufacturing consist of? Bonvillian outlines six different initiatives:

Network-centric production – embed IT into every stage of the manufacturing chain and use big data to raise the IQ of the entire production process.

Advanced materials – “Create a ‘materials genome’ using supercomputing to design all possible materials….” Designers could then select the most appropriate materials for any given product.

Distribution efficiency – the goal might be to reduce distribution costs by 10%. According to Bonvillian, that’s enough to shift decisions about onshore versus offshore manufacturing. (Could delivery by drones be part of this?)

Energy efficiency – Bonvillian argues that “U.S. manufacturing has long been overly energy-intensive.” Using energy efficient technologies “could significantly drive down production costs.”

Bonvillian develops a good list but I think one more thing is needed. Somehow we need to make it cool to participate in back-end innovation. Today, it’s cool to do financial innovation and product innovation. But I don’t see the best and brightest minds drawn to manufacturing innovation. Time to launch a branding campaign to make manufacturing cool again.